Playing It Safe with Wireless

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Playing It Safe with Wireless

An auction of wireless phone licenses starting Tuesday won't be met by a bidding frenzy. Bidders will seek to add new markets to their networks while trying to keep prices at more reasonable levels than past sales, analysts said.

The 66 participating companies will bid on 356 available wireless phone licenses. Some firms will aggressively go after a few key markets, but they are expected to bid conservatively. Some licenses may not get any bids at all, analysts said.

Licenses for Chicago and Dallas are among the most attractive available in this auction and will draw the highest bids, analysts said.

The companies qualified to participate included Cook Inlet, an affiliate of Western Wireless Corp.; a venture of Omnipoint Corp. called OPCS Three LLC; and Leap Wireless International Inc. which was spun off from Qualcomm Inc. last year.

Bidders also included dozens of little-known firms, such as ABC Wireless and ConnectBid LLC. In previous auctions, well-known investors and companies bid through such anonymous entities.

"We expect some companies to be aggressive, but the important thing is that they are rational, and don't force markets like Chicago and Dallas into the stratosphere," said John Bensche, a wireless telecommunications analyst at Lehman Brothers.

Most of the winners in a 1996 Personal Communications Service (PCS) wireless auction, for example, found they were unable to raise capital to back their bids. They later declared bankruptcy and returned the rights to the FCC. Those licenses will be included in the latest auction.

"Western and Omnipoint have ready access to vendor financing so they can build out those markets. Both companies could bid for, buy, build those markets," said David Freedman, a wireless telecommunications analyst with Bear Stearns.